BUL review Chapter 14

Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC.

False

The UCC provides that a sale or lease contract will fail for indefiniteness if more than one of its terms is left open.

False

If a seller fails to deliver conforming goods, the measure of recovery in the buyer's suit for damages is the difference between the contract price and the market price at the time the buyer learns of the breach.

True

Under the law that governs the international sale of goods, a merchant's firm offer is irrevocable only if the merchant gives assurances in a signed writing.

True

Mining Corporation purchases the business assets of Open Pit Inc., including its equipment and supplies, for an agreed-to price, payable in installments. Under the UCC, this transaction is

sale

10. Three of the most common open terms for which the UCC provides numerous provisions to fill the gaps in a contract are: (select all that apply)

) Price ) Delivery ) Payment

9. Which of the following represents a demonstration of acceptance of goods by a buyer? (Choose all that apply.)

) The buyer or lessee indicates (by words or conduct) to the seller or lessor that the goods are conforming or that he or she will retain them in spite of their nonconformity. ) The buyer or lessee fails to reject the goods within a reasonable period of time. ) The buyer performs any act inconsistent with the seller's ownership of the goods.

5. Which of the below is required for a seller or lessor to properly exercise a right to cure a defect in delivered goods?

) The cure can be made within the contract time for performance. ) The seller or lessor provides timely notice to the buyer or lessee of the intention to cure. ) The time for performance has not yet expired. ) A delivery is rejected because the goods were nonconforming.

11. Which two choices does the non-breaching party have when anticipatory repudiation occurs?

) Treat the repudiation as a final breach by pursuing a remedy ) Wait to see if the repudiating party will decide to honor the contract

The CISG is similar to ________ of the UCC

Article 2

The United Nations Convention on Contracts for the International Sale of Goods (CISG) was created in ________

1980

13. Under the CISG, an acceptance is effective on dispatch, similar to the rule under the UCC.

False

3. The common law of contracts and the Uniform Commercial Code are exactly the same.

False

5. A buyer promises to purchase everything he or she needs, so the promise constitutes a requirements contract.

False

6. If the seller is a merchant, risk of loss to goods held by the seller passes to the buyer when the buyer signs the contract.

False

7. In the absence of any specific agreements, the buyer must make payment at the time and place the contract is signed.

False

8. Only ten countries have adopted the CISG.

False

6. What is NOT one of the requirements for a merchant's firm offer?

The offer must state the date for all future shipments.

1. In sales law, a warranty is an assurance or guarantee by the seller or lessor about the quality and features of the goods being sold.

True

1. Merchants are held to a higher standard of performance or duty than are nonmerchants.

True

10. Unlike the UCC, the CISG does not apply to consumer sales.

True

11. If an additional term relates to payment, quality, quantity, price, time, and place of delivery, the CISG considers the added terms as material alterations.

True

4. Any party purchasing insurance must have a sufficient interest in the insured item to obtain a valid policy. Insurance laws—not the UCC—determine sufficiency.

True

4. The warranty of title called "no liens" protects buyers who purchase goods that are subject to a creditor's security interest.

True

6. In commercially impracticable situations, the perfect tender rule no longer applies.

True

6. In contracts that involve the sale of both goods and services, once a court decides that such a contract is primarily a goods contract, any dispute, even over the services portion, will be decided under the UCC.

True

8. If a seller breaches a contract by supplying non-conforming goods, risk of loss will not immediately pass to the buyer.

True

Because each type of warranty is created in a different way, the manner in which a warranty can be disclaimed varies with the type of warranty.

True

6. Sales contracts between parties residing in the United States and foreign countries are typically governed by the:

United Nations Convention on Contracts for the International Sale of Goods (CISG)

Brooke is an art collector and hires a broker to buy and sell artworks on her behalf. Under the UCC, in those transactions, Brooke has the status of

a merchant.

7. What is the one requirement that is NOT necessary for a writing (or electronic record) to be sufficient to satisfy the UCC's statute of frauds?

a notary public's signature

2. The basic obligation of a buyer in performing a sales or lease contract is to:

accept and pay for conforming goods in accordance with the contract.

Jess, a salesperson for Kitchens Inc., shows Lane, a buyer for Metro Diner, display items in Kitchens' showroom, stating that any purchased equipment will match the display. This is

an express warranty.

2. The general rule regarding the warranty of good title in most sales contracts is that the warranty:

arises automatically.

5. Owen buys light fixtures from an online merchant under a contract covered by the UCC. He first receives an insurable interest in the lamp:

at the moment the goods covered by the contract are identified

Meds-Free Inc. enters into a contract to sell its product line to Naturopath Clinic, which later sells some of the items to Oneida, a patient and consumer. Article 2 of the UCC applies to

both transactions.

Article 2 of the UCC governs __________

contracts for the sale of goods

Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to

d. resell the garages and recover any damages from Truck.

3. The perfect tender rule of the UCC generally requires that the seller:

deliver or hold at the buyer's disposal goods that conform to the contract's terms in every respect.

8. The UCC provides rules of construction for interpreting contracts. When the court considers a construction unreasonable, the UCC establishes the following order of priority. Which of the following expresses the correct order of priority?

express terms, course of performance, course of dealing, usage of trade

Because a thief has no title to stolen goods, anytime the thief sells those goods, she or he has breached the warranty of _______ imposed by the Uniform Commercial Code.

good title

If a buyer breaches a contract, the risk of loss to ________ goods immediately shifts to the buyer.

identified

The third type of warranty of title is the "no infringements" warranty, which automatically arises if the seller _____________

is a merchant

9. When a court determines that a contract was unconscionable at the time that it was made, the UCC allows all of the following EXCEPT which one:

make the parties go through with the contract no matter what

10. An anticipatory repudiation occurs when:

one party communicates to the other an intention not to perform.

The UCC attempts to provide a consistent and integrated framework of rules to deal with all phases _______ in a commercial sales transaction from start to finish.

ordinarily arising

An opportunity for inspection is a condition __________ to the right of the seller to enforce payment.

precedent

If the contract does not indicate where the goods will be delivered, then the place of delivery will be one of the following: a) the ________ ; b) the seller's ________, if the seller has no business location; c) the _________ of the goods, if both parties know at the time of ____________ that the goods are located somewhere other than the seller's business.

seller's business location, residence, location, contracting

A person who employs a merchant as a broker, agent, or other intermediary has the _______of a merchant in that transaction.

status

In order for the rules contained in the UCC to apply to a contract for the sale of goods, the goods must be _______

tangible

Article 19 of the CISG provides that a contract may be formed even though an acceptance contains additional terms, unless ________________

the additional terms materially alter the contract.

1. Under the UCC, a contract that contains open terms will be:

valid if the parties intended to form a contract and there is a good basis for a court to grant a remedy

1. A bailee is someone:

who temporarily cares for your personal property without passage of title.